SUPPORTLINE by FONG MIN YUAN

HEITECH Padu Bhd appears to be retracing its losses as reached the end of a correction phase that took place over the last three weeks. The stock had surged nearly 120% to a high of RM1.16 between Jan 15 and 22 before a correction ensued, which saw the share price withdraw to 76 sen last Thursday.

The stock subsequently rebounded, gaining further momentum on Monday.

While the price chart had indicated a bearish outlook since October 2017, the recent improvement in share price has a dramatic return of investor sentiment.

The key simple moving average lines (SMA) have begun untangling themselves from negative crossings with the 50-day SMA crossing above the 100day SMA, and looking en route to a positive crossing of the 200-day SMA.

The current share price, which is above the key SMAs, is on an upwards trajectory and looks set to challenge the immediate overhead resistance at 94 sen.

Some further resistance can be seen at 98 sen, although the share price could be attempting to return to late-January levels above RM1.

Key technical indicators support the return to a rally. The slow-stochastic momentum index is showing bullish growth towards the 52-point midline.

The 14-day relative strength index has also returned to an upwards trajectory at 69 points.

The daily moving average convergence/divergence line remains uncommitted although a susbsequent share price increase should see a positive crossing with the signal line.

Investor interest is also ticking higher with trading volume returning to levels seen in the closing days of January.

Support for the share price can be seen at its recent low of 76 sen, while the rising 21-day simple moving average at 71 sen could offer further support.

The comments above do not represent a recommendation to buy or sell.

Note: This article first appeared in StarBiz Premium yesterday.